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VA not doing enough to verify service-disabled veteran owned firms

Thursday - 8/2/2012, 5:11am EDT

By Taeja Smith
Special to Federal News Radio

The Government Accountability Office continues to find vulnerabilities that could
lead to fraud and abuse in the Department of Veteran Affairs' service-disabled
veteran-owned small business (SDVOSB) program.

GAO issued nine reports since 2009 focusing on the SDVOSB program's vulnerability
and the agency's actions.

"VA has taken some positive action to enhance its fraud prevention efforts by
establishing processes in response to six of 13 recommendations,
" GAO stated in its report released Wednesday.

One of those recommendations includes VA making unannounced visits to high-risk
firms.

The 59-page report found VA made inconsistent statements regarding its progress in
verifying firms listed on the Vetbiz website.

"In one communication, VA stated that as of February 2011, all new verifications
would use the 2010 act process going forward. However, as of April 1, 2012, 3,717
of the 6,178 SDVOSB firms (60 percent) listed as eligible in VetBiz had not been
verified under the 2010 Act process," auditors stated. "VA has also begun action
on some remaining recommendations, such as providing fraud awareness training and
removing contracts from ineligible firms, though these procedures need to be
finalized."

The 2010 Veterans Small Business Verification Act did not require
a deadline for VA to verify SDBOSBs, and required a less-stringent process "in
many cases insufficient to establish control and ownership." The law lets
businesses self-certify as being SDVOSBs with little supporting data.

Since the Small Business Administration relies solely on firm's self-
certification, and no commitment is mandated to create a verification process,
"five new cases of potentially ineligible firms received $190 million in SDVOSB
contract obligations," GAO stated

One firm, for example, was deemed ineligible by the VA, but continued
its self-certification and received about $860,000 from the General Services
Administration and the Department of Interior. Furthermore, the Department of
Defense Office of Inspector General found that DoD provided $340
million to firms that "potentially misstated their SDVOSB status" in 2012.